VANCOUVER, May 14, 2019 /CNW/ - UrtheCast Corp.
(TSX:UR) ("UrtheCast" or the "Company"), a leading provider of
information-rich products and services in the geospatial and
geo-analytics markets, reported its financial results for the three
months ended March 31, 2019. All
financial figures are in Canadian dollars unless otherwise
indicated.
As a result of the planned sale of Deimos Imaging or its assets,
the operations of Deimos Imaging have been classified as
discontinued operations for the three months ended March 31, 2019 and the associated comparative
prior period. The financial information in this press release is
based on the Company's continuing operations unless otherwise
noted.
Q1 2019 Financial Results
(in millions of
Canadian dollars)
|
Q1
2019
|
Q1 2018
|
Revenue
|
$
|
4.4
|
$
|
3.3
|
Operating
costs
|
7.2
|
7.6
|
Adjusted EBITDA from
continuing operations1
|
(0.8)
|
(3.5)
|
Net loss from
continuing operations
|
(1.4)
|
(3.9)
|
Net loss from
discontinued operations
|
(5.1)
|
(7.2)
|
Net loss
|
(6.5)
|
(11.1)
|
1
Non-IFRS earnings measure. See reconciliation of Adjusted EBITDA
to Net Loss under "Non-IFRS Earnings Measures"in the
Company's Management Discussion & Analysis for the period
ending March 31, 2019
|
"Our near-term focus continues to be on strengthening and
streamlining our current business lines while advancing towards the
build and launch of the UrtheDaily Constellation, a global
change detection system that will transform the way we observe our
planet. Indications of market demand for our unrivalled UrtheDaily
service offering remain robust and widespread," said Donald Osborne, CEO of UrtheCast. "Additionally,
our ongoing restructuring activities are beginning to yield
positive results, most notably in the form of a significantly
reduced fixed cost base, and we have enhanced UrtheCast's strategic
focus, resilience, and ability to translate growth opportunities
into positive cashflow. We continue to make progress towards
delivering a positive run-rate EBITDA for UrtheCast by the end of
2019 and have already begun to see a positive EBITDA contribution
from our recently completed acquisition of Geosys, a provider of
world-class geo-analytics solutions for precision agriculture."
Mr. Osborne continued, "The Geosys acquisition furthers our
vertical integration strategy and moves UrtheCast up the
value-chain into geo-analytics, a high-margin and rapidly growing
market segment. The combination of daily imagery data from
UrtheDaily with the innovative analytics capabilities of Geosys is
going to provide insights that will revolutionize the agriculture
industry."
Revenue in the first quarter of 2019 was $4.4 million and was comprised entirely of
geo-analytics products and services revenue resulting from the
acquisition of Geosys and the commencement of a 13-year services
contract with Geosys' former parent company, Land O'Lakes. The
Company did not recognize any engineering and value-added services
revenue in the first quarter of 2019, compared to $3.3 million in the first quarter of 2018, due to
progress delays incurred by its key subcontractors in completing
milestones under its engineering and value-added services contract.
The decrease was also due to revenue being recognized on contracts
for the provision of space hardware in the first quarter of 2018
which were completed during 2018.
Operating costs of $7.2 million in
the first quarter of 2019 decreased by $0.4
million compared to the first quarter of 2018, due to the
impact of cost reduction initiatives and a decrease in engineering
subcontractor costs related to the decrease in engineering services
revenues. These cost reductions were partially offset by the
consolidation of Geosys operating costs from the acquisition date.
Operating costs from continuing operations, exclusive of Geosys,
have been reduced by more than 60% since the first quarter of
2018.
Adjusted EBITDA from continuing operations of negative
$0.8 million in the first quarter of
2019 improved by $2.8 million
compared to the same quarter last year due to lower corporate and
engineering services related costs and a positive EBITDA
contribution from Geosys.
The net loss of $6.5 million in
the first quarter of 2019 improved by $4.6
million compared to the net loss from the first quarter of
2018, primarily due to higher revenue, lower operating costs, and a
smaller net loss from discontinued operations.
Outlook & Going Concern
We refer you to the Company's consolidated financial statements
for the three months ended March 31,
2019 and the related Management's Discussion & Analysis
for further details relating to the Company's liquidity position.
The Company has continued to take steps subsequent to March 31, 2019 to ensure that it is able to
continue as a going concern and that it has adequate liquidity in
the near term.
SELECTED FINANCIAL INFORMATION
The following table provides selected financial information of
the Company, which was derived from, and should be read in
conjunction with, the consolidated financial statements for the
three months ended March 31, 2019.
All financial information is in thousands of Canadian dollars,
unless otherwise noted, and except for number of shares and per
share amounts.
|
Three months ended
March 31,
|
|
|
2019
|
|
2018
|
Revenue
|
$
|
4,425
|
$
|
3,251
|
Other operating
income
|
|
331
|
|
195
|
|
|
4,756
|
|
3,446
|
Operating
costs
|
|
|
|
|
Direct costs,
selling, general and administrative
expenses
|
|
5,237
|
|
6,670
|
Research
expenditures
|
|
294
|
|
306
|
Depreciation and
amortization
|
|
1,417
|
|
160
|
Share-based
payments
|
|
229
|
|
441
|
|
|
7,177
|
|
7,577
|
Operating
loss
|
|
(2,421)
|
|
(4,131)
|
Net finance
costs
|
|
(1,636)
|
|
(158)
|
Gain on derivative
financial instruments
|
|
3,475
|
|
227
|
Foreign exchange
(loss) gain
|
|
(1,093)
|
|
212
|
Loss before income
taxes
|
|
(1,675)
|
|
(3,850)
|
Income tax recovery
(expense)
|
|
253
|
|
(26)
|
Net loss from
continuing operations
|
|
(1,422)
|
|
(3,876)
|
Net loss from
discontinued operations
|
|
(5,053)
|
|
(7,182)
|
Net
loss
|
|
(6,475)
|
|
(11,058)
|
Other comprehensive
income
|
|
163
|
|
2,256
|
Comprehensive
loss
|
$
|
(6,312)
|
$
|
(8,802)
|
Loss per share –
basic and diluted
|
$
|
(0.05)
|
$
|
(0.09)
|
Loss per share
from continuing operations – basic and diluted
|
$
|
(0.01)
|
$
|
(0.03)
|
NON-IFRS EARNINGS MEASURES
The following table reconciles our Non-IFRS earnings measures to
Net Loss prepared in accordance with IFRS.
|
Three months ended
March 31,
|
|
|
2019
|
|
2018
|
ADJUSTED
EBITDA:
|
|
|
|
|
Net loss from
continuing operations
|
$
|
(1,422)
|
$
|
(3,876)
|
Add back
(subtract):
|
|
|
|
|
Depreciation and
amortization
|
|
1,417
|
|
160
|
Net finance
costs
|
|
1,636
|
|
158
|
Income tax (recovery)
expense
|
|
(253)
|
|
26
|
EBITDA from
continuing operations
|
|
1,378
|
|
(3,532)
|
Share-based
payments
|
|
229
|
|
441
|
Gain on derivative
financial instruments
|
|
(3,475)
|
|
(227)
|
Foreign exchange loss
(gain)
|
|
1,093
|
|
(212)
|
ADJUSTED EBITDA
FROM CONTINUING
OPERATIONS
|
$
|
(775)
|
$
|
(3,530)
|
ADJUSTED EBITDA
FROM DISCONTINUED
OPERATIONS
|
|
(1,293)
|
|
(2,534)
|
ADJUSTED
EBITDA
|
$
|
(2,068)
|
$
|
(6,064)
|
About UrtheCast
UrtheCast Corp. is a Vancouver-based company that serves the
rapidly growing and evolving geospatial and geo-analytics markets
with a wide range of information-rich products and services.
UrtheCast is a Big Data services company specializing in
satellite imaging, data services and geo-analytics. The data the
Company collects from its satellites and third parties fuel
powerful cloud-based analytics platforms at the leading edge of the
AI and machine learning revolution. The insights gained from the
Company's imagery, cloud-based processing chain, and algorithms
allows its customers to identify potential adverse events quickly,
track long-term trends, monitor change, reduce intervention times,
uncover opportunities, and take targeted, strategic actions to
better serve their customers and fulfill their missions. Key
markets served are agriculture, forestry, environment and defense
and intelligence.
UrtheCast has designed and proposes to build and launch a
satellite constellation designed to capture high-quality,
medium-resolution optical imagery of the Earth's entire land mass
(excluding Antarctica) everyday,
called UrtheDailyTM, and has developed advanced
synthetic aperture radar technology for satellites, called
OptiSARTM. Subject to UrtheCast financing the build and
launch of the UrtheDaily Constellation satellites in a timely
manner, the Company currently expects the UrtheDaily Constellation
to begin operations in 2021. UrtheCast has entered into multiple
agreements for the sale of imagery from the UrtheDaily
Constellation once UrtheCast begins delivering data to
customers.
In January 2019, UrtheCast also
acquired Geosys, a digital agriculture company that provides a
suite of geo-analytics products and services to agribusinesses
around the world (see "Business Highlights – Geosys Acquisition").
The acquisition of Geosys positions UrtheCast as a fully
vertically-integrated geo-analytics solution provider for the
precision agriculture market, able to integrate satellite imagery
services with analytics.
The Company currently owns and operates two Earth Observation
("EO") satellites, Deimos-1 and Deimos-2. Imagery data from these
sensors is continuously downlinked to ground stations around the
world and distributed directly to partners and customers in
multiple markets. UrtheCast also processes and distributes imagery
data and value-added products on behalf of the PanGeo Alliance, a
network of seven EO satellite operators with a combined 13 medium-
and high-resolution EO sensors, led by Deimos Imaging, S.L.U., a
wholly-owned subsidiary of UrtheCast. During the first quarter of
2019, the Company committed to a formal plan and commenced a bid
process to sell all or substantially all of the assets of Deimos
Imaging.
For more information, visit UrtheCast's website at
www.urthecast.com.
Non-IFRS Financial Measures
The Company prepares its financial statements in accordance
with International Financial Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board. This
release includes certain non-IFRS financial measures, such as
EBITDA, adjusted EBITDA, and adjusted EBITDA from continuing
operations. The Company uses these non-IFRS financial measures as
supplemental indicators of its operating performance and financial
position. These measures do not have any standardized meanings
prescribed by IFRS and therefore are unlikely to be comparable to
the calculation of similar measures used by other companies and
should not be viewed as alternatives to measures of financial
performance calculated in accordance with IFRS or considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. These non-IFRS financial measures should
be read in conjunction with the Company's financial statements and
accompanying MD&A. An explanation of how the Company calculates
these measures is set out in the Company's MD&A under the
heading "Non-IFRS Earnings Measures" for the period ending
March 31, 2019, a copy of which is
available on the Company's SEDAR profile and website.
Forward Looking Information
This release contains certain information which, as
presented, constitutes "forward-looking information" or
"forward-oriented financial information" within the meaning of
applicable Canadian securities laws. Forward-looking information
involves statements that relate to future events and often
addresses expected future business and financial performance,
containing words such as "anticipate", "plan", "explore" and
"expect", statements that an action or event "may", "should" are
"going" to occur or "will" be taken or occur, or other similar
expressions and includes, but is not limited to, statements
relating to: UrtheCast's expectations with respect to its
ability to raise capital and to continue as a going concern and
management's plans to improve the Company's financial position;
expectations regarding achieving a positive run-rate EBITDA by the
end of 2019 expectations regarding UrtheCast's ability to meet its
obligations and satisfy its liabilities under its existing
indebtedness; expectations underlying the Company's financial
statements, including that they have been prepared on a
going concern basis, meaning that the Company will be able to
realize its assets and discharge its liabilities in the normal
course of operations; expectations regarding a
proposed and/or planned sale or other monetization of all or
substantially all of Deimos Imaging and its related business;
UrtheCast's expectations with respect to its ability to raise
proceeds from a debt or equity offering, achieve the required
leverage and contracted value ratios and otherwise satisfy the
conditions of its indebtedness and business needs generally;
UrtheCast's ability to fully integrate Geosys into the Company's
other operations and achieve the expected synergies and other
benefits therefrom on an ongoing basis and to complete the second
closing of the acquisition of Geosys on the terms set forth in the
definitive purchase agreement or at all, as well as the Company's
ability to service and obtain additional revenues from the Service
Level Agreement with Winfield, a
subsidiary of Land O' Lakes; UrtheCast's ability to meet its
obligations and satisfy its liabilities under its existing
indebtedness; UrtheCast's ability to satisfy the conditions
precedent to certain contracts related to the purchase of imagery
data from the UrtheDaily satellite constellation; expectations
regarding monetization of the OptiSAR technology and related
intellectual property developed by the Company; new product
functionality and suitability; projected operating expenses and
ongoing efforts to reduce fixed costs and capital expenditures;
UrtheCast's ability to secure additional customer contracts for the
planned UrtheDaily™ constellation in a timely manner or at all; and
UrtheCast's ability to secure financing for the planned UrtheDaily™
constellation on acceptable terms, in a timely manner, or at all,
and the related expectations regarding its build, launch and
operations;. Such statements reflect UrtheCast's current views
with respect to future events, and are necessarily based upon a
number of estimates and assumptions that, while considered
reasonable by UrtheCast as at the date of this press release, are
inherently subject to significant uncertainties and
contingencies.
Many factors could cause UrtheCast's actual results or
performance to be materially different from expectations that may
be expressed or implied by such forward-looking statements,
including, among others: the Company's ability to rectify
its current cash constraints and to continue as a going concern;
the Company's ability to enter into alternative financing for the
UrtheDaily satellite constellation, and any delays or failures in
the design, development, construction, launch and operational
commissioning of the such constellation; the Company's ability to
comply with debt and repayment obligations and avoid the exercise
of lenders' rights, including with respect to seizing secured
assets; unexpected increases in fixed or variable costs; lower than
expected revenues from Geosys or the Company's other products and
services in the remainder of 2019; the loss of key personnel due to
the Company's financial position and/or market factors; the
Company's ability to fund its future operations, which is
contingent on its efforts to raise additional financing and/or sell
certain assets of the Company; an adverse outcome in the Company's
litigation with Eastwood Capital Corp and William Holland, or additional claims made by
lenders, shareholders or suppliers of the Company in connection
with its operations and/or performance; the Company's ability to
successfully complete a sale or other transaction involving Deimos
Imaging on commercially reasonable terms, or at all;
UrtheCast's ability to fund the remaining two installments for
the purchase price of the Geosys transaction or otherwise
successfully complete the second closing of the Geosys
acquisition; loss, reduction in scope, termination, failure
to satisfy conditions precedent or decline in general of the
Company's agreements or relationships with its key partners,
including Land O' Lakes, Inc. and purchasers of advance data
purchase subscription agreements for the data expected to be
provided by the UrtheDaily constellation ; risks related to the
government funding received by UrtheCast and risks arising from
breach or default of obligations under the related agreements with
certain government agencies; delays or disputes with
customers regarding the payment milestones under the Company's data
imagery, value-added services or engineering services agreements,
which often include complex criteria and/or performance by third
parties to successfully complete the contract and obtain payment;
legal and regulatory changes, or the Company's failure to comply
with listing requirements and other rules of the TSX and/or
regulations of applicable securities authorities in Canada; and; as well as those factors and
assumptions discussed in UrtheCast's Annual Information Form dated
March 29, 2019, which is available
under UrtheCast's SEDAR profile
at www.sedar.com. UrtheCast cautions readers
that such factors and uncertainties are not exhaustive and that
should certain risks or uncertainties materialize, or should
underlying estimates or assumptions prove incorrect, actual
results, performance or achievements may vary significantly from
those expected. There can be no assurance that the actual
strategies, results, performance, events or activities anticipated
by the Company will be realized or, even if substantially realized,
that they will have the expected consequences to, or effects on,
the Company.
UrtheCast undertakes no obligation to update forward-looking
statements except as required by Canadian securities laws. Readers
are cautioned against attributing undue certainty to
forward-looking statements..
SOURCE UrtheCast Corp.